Policy Seminars -- Fall 2007
| Speaker: Gabriel Natividad -- UCLA Anderson School of Management |
| Topic: The Organizational Efficiency of Internal Capital Markets |
| Date/Place/Time: November 16, 2007 / UCLA Anderson School -- Entrepreneurs Hall C303 / 1:00 P.M. to 2:00 P.M. |
| Abstract: I investigate the effect of multidivisional structure on investment efficiency using project-level data from the motion picture industry in the United States. I find that the multidivisional structure of the largest studios in Hollywood increases the production budget of a movie by $7M, a 90% increment at the mean, but does not improve its box office performance. I arrive at this finding in two different ways. First, I observe a decrease in the investment efficiency of independent distributors after being acquired by the largest movie studios. Second, I account for the potentially endogenous relation of multidivisional structure and larger budget using instruments based on the configuration of movie creative teams. The results suggest that the influence of a multidivisional structure on efficiency at the project level can be sizable in addition to other financial and organizational characteristics. Because this influence is negative, I conclude that internal capital markets in Hollywood do not improve investment efficiency. |
| Links to papers: Click here for paper |